President offers few ideas for cutting long-term debt

Published: Friday, February 15, 2013 at 5:30 a.m.

Last Modified: Thursday, February 14, 2013 at 5:51 p.m.

President Barack Obama didn't pay much attention to the elephant in the chamber of the U.S. House of Representatives on Tuesday night.

No, the elephant wasn't the Republican majority in the House, although most Republicans in the audience for the State of the Union speech responded coolly to the president's proposals. By far the biggest elephant in the room was invisible but still a palpable presence: the $16.4 trillion national debt.

The massive federal debt, large annual budget deficits extending as far as the eye can see and the Republican House all had an influence on the modest spending increases Obama proposed. But the president was still determined to tell Americans what Washington could do for them — not what we all can do to reduce the debt and put the federal government on a fiscally responsible course.

Of course, everyone has an interest in shrinking the national debt. Each citizen's share of that debt now tops $52,000. But Obama's message offered little hope, over the long term, of the nation coming to grips with the looming debt crisis.

Oh, the president did say his proposals — by some estimates, around $80 billion in new spending — wouldn't increase the deficit "by a single dime." However, he didn't spell out how he was going to cover the higher costs.

As for actually cutting the deficit, Obama said members of Congress had worked together to reduce the deficit by more than $2.5 trillion through a combination of spending cuts and the president's favorite deficit remedy, tax hikes on the wealthy.

That's basically true, as far as it goes, but few economists believe the measures adopted by Congress go nearly far enough to control the long-term accumulation of debt.

The nonpartisan Congressional Budget Office recently issued a report on the federal budget outlook. Here's a succinct summary: the long-term outlook is not good.

According to CBO analysts, the budget deficit will decline to $845 billion this year — the first time in five years the deficit has dipped below $1 trillion. If the federal government continues on its current course, deficits will fall until later in the decade, when they will begin an inexorable rise as a result, the CBO said, "of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance and growing interest payments on the federal debt."

The CBO projects that deficits from 2014 to 2023 will total $7 trillion. Obama didn't mention that in his State of the Union address. To be fair, he said that the "biggest driver of our long-term debt is the rising cost of health care for an aging population." But he embraced only "modest reforms" for health-care programs like Medicare, and he didn't provide details on what those reforms would be or how only "modest" changes would head off a long-term reckoning on the debt.

Instead, he served up happy talk about investment tax credits, infrastructure projects and early childhood education. That's all well and good, but what will the future hold for our children if federal debt grows into a huge burden weighing down the economy?

Obama needs to join Republicans in a search for real solutions to the debt crisis. The cost of entitlement programs and interest on the debt are eventually going to consume the budget, leaving little on the table for working families. And as the CBO noted, rising debt could bring on a fiscal crisis in which investors lose confidence in the federal government and the cost of government borrowing soars to an unsustainable level.

Modest changes in entitlements are not enough to stop the country from going off a real fiscal cliff sometime in the next decade. The long-term state of the union will look bleak until the president and Congress tackle automatic federal spending on entitlements.

<p>President Barack Obama didn't pay much attention to the elephant in the chamber of the U.S. House of Representatives on Tuesday night. </p><p>No, the elephant wasn't the Republican majority in the House, although most Republicans in the audience for the State of the Union speech responded coolly to the president's proposals. By far the biggest elephant in the room was invisible but still a palpable presence: the $16.4 trillion national debt. </p><p>The massive federal debt, large annual budget deficits extending as far as the eye can see and the Republican House all had an influence on the modest spending increases Obama proposed. But the president was still determined to tell Americans what Washington could do for them &mdash; not what we all can do to reduce the debt and put the federal government on a fiscally responsible course. </p><p>Of course, everyone has an interest in shrinking the national debt. Each citizen's share of that debt now tops $52,000. But Obama's message offered little hope, over the long term, of the nation coming to grips with the looming debt crisis. </p><p>Oh, the president did say his proposals &mdash; by some estimates, around $80 billion in new spending &mdash; wouldn't increase the deficit "by a single dime." However, he didn't spell out how he was going to cover the higher costs. </p><p>As for actually cutting the deficit, Obama said members of Congress had worked together to reduce the deficit by more than $2.5 trillion through a combination of spending cuts and the president's favorite deficit remedy, tax hikes on the wealthy. </p><p>That's basically true, as far as it goes, but few economists believe the measures adopted by Congress go nearly far enough to control the long-term accumulation of debt. </p><p>The nonpartisan Congressional Budget Office recently issued a report on the federal budget outlook. Here's a succinct summary: the long-term outlook is not good. </p><p>According to CBO analysts, the budget deficit will decline to $845 billion this year &mdash; the first time in five years the deficit has dipped below $1 trillion. If the federal government continues on its current course, deficits will fall until later in the decade, when they will begin an inexorable rise as a result, the CBO said, "of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance and growing interest payments on the federal debt." </p><p>The CBO projects that deficits from 2014 to 2023 will total $7 trillion. Obama didn't mention that in his State of the Union address. To be fair, he said that the "biggest driver of our long-term debt is the rising cost of health care for an aging population." But he embraced only "modest reforms" for health-care programs like Medicare, and he didn't provide details on what those reforms would be or how only "modest" changes would head off a long-term reckoning on the debt. </p><p>Instead, he served up happy talk about investment tax credits, infrastructure projects and early childhood education. That's all well and good, but what will the future hold for our children if federal debt grows into a huge burden weighing down the economy? </p><p>Obama needs to join Republicans in a search for real solutions to the debt crisis. The cost of entitlement programs and interest on the debt are eventually going to consume the budget, leaving little on the table for working families. And as the CBO noted, rising debt could bring on a fiscal crisis in which investors lose confidence in the federal government and the cost of government borrowing soars to an unsustainable level. </p><p>Modest changes in entitlements are not enough to stop the country from going off a real fiscal cliff sometime in the next decade. The long-term state of the union will look bleak until the president and Congress tackle automatic federal spending on entitlements.</p>